Managing Business Performance

Managing Business Performance

INTRODUCTION...........................................................................................................................2
MAIN BODY..................................................................................................................................2
Question 1........................................................................................................................................2
1. Explain the principle behind lifecycle costing and evaluate that why Margrin in particular
should consider this lifecycle principle.......................................................................................2
2. Produce the budgeted result.....................................................................................................3
3. Explain that why incremental budgeting is common method of budgeting and identify the
problems in this approach............................................................................................................4
Question 2........................................................................................................................................5
1. Environmental management accounting..................................................................................5
2. Explain the concepts of Total Quality Management and identify its features.........................6
3. Calculate the target cost of the Sims........................................................................................8
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
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INTRODUCTION
Managing business performance is the act of establishing organisational targets, evaluating
the strategies used to accomplish those goals, and then finding opportunities for members to
manage those objectives more efficiently (Alexandridis and et.al., 2018). Through gathering and
analysing data, an organisation may recognise the impact of management changes on results, and
then adjust those solutions to improve, create a more efficient process. The key thing that
required noting about company performance management is that, it is used to optimize the
utilization of employees and management. The use of indicators is only a means of control, with
an increased profitability for that reason. This assessment based on two different questions where
first one is about principle behind the lifecycle costing and why incremental budgeting is one of
the common approaches. In addition, second question is about role of environmental
management accounting in the modern business environment.
MAIN BODY
Question 1
1. Explain the principle behind lifecycle costing and evaluate that why Margrin in particular
should consider this lifecycle principle
Life-cycle cost analysis (LCCA) is a tool for determining the overall maintenance costs of
the plant. It considered all the costs which obtained from business, maintaining and disposing of
a design or engineering method (Chin and Gallagher, 2019). LCCA is particularly useful when
plan options that meet similar performance requirements but vary with regard to original costs
and operating costs need to be evaluated in order to choose the one that maximises net savings.
For example, LCCA can help decide if the installation of a high-performance HVAC or glazing
device, which can raise initial costs but resulting in significantly reduced operational and
maintenance costs, is cost-effective or not. LCCA is not useful for distribution of the budget.
Margrin consider this lifecycle principle because it is varies from the traditional cost
accounting technique, which records cost object efficiency on a periodic basis such as weekly,
quarterly and annually. Whereas life cycle costing includes measuring cost and cost object sales
like commodity, project etc. over many calendar cycles i.e. estimated cost object life.
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Product life-cycle analysis is also a method used to provide such a long-term image of the
feasibility of the product range, feedback mostly on efficacy of life-cycle management and
executing data to explain the impact on the economy of the option chosen in the development,
design phase, etc. It is often seen as a way to boost the management of production costs. It is
necessary to track and calculate costs at-point of the product life cycle. Principle of lifecycle cost
includes the several features or characteristics which attract Margrin Company to consider these
principles and these are as follow:
 Product life-cycle costing includes measuring the costs and sales of a product over many
calendar cycles during its life-cycle. It helps the Margrin Company to evaluate cost and
total sales of their brand new game GFX.
 Product life cycle cost tracks the expense of research & design and production and the
overall extent of these costs for each particular product relative to the profit of the item
(Fodor, 2020). Margrin identify the exact amount of spending on research & development
regarding new game.
 Each step of the product life-cycle introduces various risks and opportunities that may
consider various effective strategies. With the help of principle, Margrin able to build
effective strategy which helps in minimising risk or maximising opportunity.
 The life-cycle of the product can be extended by seeking new uses or users or by the
consumption of current users. Basically, it helps in attracting more users which maximise
the overall sales.
Use of Life cycle principle in Margrin Company provide several benefits such as, it results in
quicker revenue-generating behaviour or lower costs than might otherwise be regarded. It
ensures effective decision-making by a more reliable and practical measurement of sales and
costs, at least at the basic stage of the life cycle. It encourages long-term incentives. It offers an
aggregate structure for the consideration of cumulative incremental costs over the lifetime of the
product.
2. Produce the budgeted result
Particulars Year 1 Year 2 Year 3
Sales Unit £ 8000 £ 16000 £ 4000
Sales value (Unit * Selling Price) £ 240,000 £ 480,000 £ 120,000
Less: Cost (£ 130,000) (£ 225,000) (£ 130,000)
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